from the took-'em-long-enough dept

It looks like the Ultramercial saga may finally be ending. As we've been covering for many years, Ultramercial held a patent (7,346,545) on watching an ad to get access to content, and it sued lots of companies. While a lower court rejected the patent, CAFC (the appeals court for the Federal Circuit, which handles all patent cases) overturned that ruling. The key issue: is something patentable if you take a common idea and just add "on the internet." CAFC said yes. The Supreme Court asked CAFC to try again following its own ruling in the Mayo case (which said you couldn't patent medical diagnostics). But CAFC still found the patent to be valid. Finally, earlier this year, following the Alice ruling, the Supreme Court gave CAFC a third try to get it right.

It seemed rather obvious to us that it was the Supreme Court saying, "Hey, would you reject this patent already?" and finally, CAFC got the message. On the third try, CAFC dumped the patent as invalid. More specifically, it goes all the way back to the original district court ruling, allowing the patent to be declared invalid on a motion to dismiss (i.e., before going through the massive expense of a big trial). This is very helpful, since it gives people sued for patents a path to success that won't put them too deep in the hole financially. Traditionally, courts were reluctant to toss out patents that early in the process, and patent holders relied on that fact, knowing that the legal bills for anyone they sue will be astronomical, even on a bogus patent. Now, however, courts can toss out those patents much more quickly. CAFC says so. Check out the full ruling:

We conclude that the limitations of the ’545 claims do
not transform the abstract idea that they recite into
patent-eligible subject matter because the claims simply
instruct the practitioner to implement the abstract idea
with routine, conventional activity. None of these eleven
individual steps, viewed “both individually and ‘as an
ordered combination,’” transform the nature of the claim
into patent-eligible subject matter. See Alice, 134 S. Ct.
at 2355 (quoting Mayo, 132 S. Ct. at 1297, 1298). The
majority of those steps comprise the abstract concept of
offering media content in exchange for viewing an advertisement.
Adding routine additional steps such as updating
an activity log, requiring a request from the consumer
to view the ad, restrictions on public access, and use of the
Internet does not transform an otherwise abstract idea
into patent-eligible subject matter. Instead, the claimed
sequence of steps comprises only “conventional steps,
specified at a high level of generality,” which is insufficient
to supply an “inventive concept.”

There's an even more interesting concurring opinion from Judge Haldane Mayer, that I kind of wish was the full opinion. It points out that patents that don't "promote the progress" are unconstitutional.

The Constitution’s Intellectual Property Clause is at
once a grant of power and a restriction on that power.... Unless we are to assume that the
constraints explicit in the Intellectual Property Clause
are mere surplusage, we are bound to ensure that the
patent monopoly serves “[t]o promote the Progress of
Science and useful Arts,”...
“This is the standard expressed in the Constitution and it
may not be ignored.”

Mayer's ruling is the one that also clearly lays out why letting courts invalidate patents so early on is so important.

From a practical perspective, addressing section 101
at the outset of litigation will have a number of salutary
effects. First, it will conserve scarce judicial resources.
Failure to recite statutory subject matter is the sort of
“basic deficiency,” that can, and should, “be exposed at the
point of minimum expenditure of time and money by the
parties and the court,”....

Second, resolving subject matter eligibility at the
outset provides a bulwark against vexatious infringement
suits. The scourge of meritless infringement claims has
continued unabated for decades due, in no small measure,
to the ease of asserting such claims and the enormous
sums required to defend against them....

Finally, and most importantly, turning to section 101
at the outset protects the public. See Cardinal Chem.,
508 U.S. at 101 (emphasizing the public interest in
preventing the “grant [of] monopoly privileges to the
holders of invalid patents” (footnote omitted)). Subject
matter eligibility challenges provide the most efficient
and effective tool for clearing the patent thicket, weeding
out those patents that stifle innovation and transgress the
public domain. As a general matter, trial courts have
broad discretion in controlling their dockets and in
determining the order in which issues are to be
adjudicated. But the public interest in eliminating
defective patents is an “even more important
countervailing concern[],” Cardinal Chem., 508 U.S. at 99,
which counsels strongly in favor of resolving subject
matter eligibility at the threshold of litigation.

Furthermore, the opinion notes that courts should get away from simply presuming patents are valid:

Indeed, applying a presumption of eligibility is
particularly unwarranted given that the expansionist
approach to section 101 is predicated upon a
misapprehension of the legislative history of the 1952
Patent Act. Those who support a “coarse filter” approach
to section 101 often argue that the Act’s legislative history
demonstrates that Congress intended statutory subject
matter to “include anything under the sun that is made
by man.” See, e.g., AT&T Corp. v. Excel Commc’ns, Inc.,
172 F.3d 1352, 1355 (Fed. Cir. 1999). Read in context,
however, the legislative history says no such thing. See
Mayo, 132 S. Ct. at 1303–04. The full statement from the
committee report reads: “A person may have ‘invented’ a
machine or a manufacture, which may include anything
under the sun that is made by man, but it is not
necessarily patentable under section 101 unless the
conditions of the title are fulfilled.” H.R. Rep. No. 1923,
82d Cong., 2d Sess., at 6 (1952) (emphasis added). Thus,
far from supporting an expansive approach to section 101,
the relevant legislative history makes clear that while a
person may have “invented” something under the sun, it
does not qualify for patent protection unless the Patent
Act’s statutory requirements have been satisfied.

Good stuff all around... and very different from the CAFC of the past.

from the try,-try-again dept

You may recall the important WildTangent v. Ultramercial case that has been going on for some time. This is the case in which the courts basically need to decide if merely adding an "on the internet' turns a basic idea into a patentable idea. In 2010 a court rejected Ultramercial's patent (7,346,545) on a process requiring people to watch an ad before getting access to content. However, the CAFC (court of appeals for the Federal Circuit) overturned that ruling, finding that taking a basic concept and adding "on the internet" to it made it patentable.

In 2012, following the Supreme Court's ruling in the Prometheus Labs v. Mayo case, that found medical diagnostics unpatentable, the Supreme Court told CAFC to try again on the Ultramercial case. Given another chance to get it right, CAFC again whiffed and insisted that this was patentable subject matter. In light of the recent ruling in CLS Bank v. Alice (which relied heavily on that Mayo ruling), the Supreme Court has told CAFC to maybe try one more time to see if it might actually get it right this time around, given the new guidance in the CLS Bank ruling.

In short, the Supreme Court seems to be telling CAFC: do we really need to draw a map for you here? Adding "on the internet" doesn't make something patentable. Now, the remaining question is whether or not CAFC will finally get that message.

Separately, it's also perhaps notable that the Supreme Court declined to hear the appeal in a different ruling, the Accenture v. Guidewire patent case, in which CAFC found the patent invalid based, in large part, on the Mayo ruling and the earlier CLS Bank CAFC ruling. Basically, here was a case where CAFC (properly) rejected a patent for being ridiculously overbroad, and now the Supreme Court doesn't have any concerns with that ruling. But in the Ultramercial case, where CAFC has twice upheld an overly broad patent, the Supreme Court is telling CAFC to try, try again.

from the GOTO-patent-invalidation dept

Public Knowledge is back at it, carving holes in dubious software patent claims by distilling supposedly "complex" ideas into a minimal amount of code. Late last year, Public Knowledge filed an amicus brief in a lawsuit involving Ultramercial, whose disputed patent basically involved appending "on the internet" to a very basic idea.

In that case, "watching a video on the internet" had been turned into a 349-word, 11-step process that convinced the patent reviewer the process was somehow protectable. Charles Duan of Public Knowledge took that word salad and converted it into 16 lines of code, poking rather large holes in Ultramercial's inflated description.

Obviously, no one can get a patent on escrow. Abstract ideas (like escrow) can’t be patented. Why not? Because ideas are the starting point for every new business, technology, and product. Patents on ideas would squash innovation. As the Supreme Court explained in another recent case, ideas are the “basic tools of scientific and technological work,” and a patent on an idea “might tend to impede innovation more than it would tend to promote it.”

So, how did Alice Corp. get this patent? By adding a few words to the idea: "done by a computer." Of course, to get protection for an abstract (and simple) idea, you have to use considerably more words than that. Here's the description, which makes it sound much more impressive than it actually is.

a computer, coupled to said data storage unit and said communications controller, that is configured to…

(b) electronically adjust said first account and said third account in order to effect an exchange obligation arising from said transaction between said first party and said second party after ensuring that said first party and/or said second party have adequate value in said first account and/or said third account, respectively.

Now, extremely efficient code isn't always the sign of a simple process, but patenting an age-old abstract idea like escrow is, first of all, something that (theoretically) isn't allowed by our patent process. Adding "with a computer" doesn't suddenly turn a non-patentable idea into protectable IP… or at least it shouldn't. But as Ultramercial proved, abstract ideas can and do become prime patent troll properties. As Anna Sallstrom of Public Knowledge notes, granting dressed-up ideas patent protection is nothing more than "trading progress for abstract patents." Hopefully, the Supreme Court will see Alice Corp.'s claims for what they are: escrow + a computer.

from the one-rarely-sees-javascript-in-a-legal-filing dept

Public Knowledge has entered the battle against Ultramercial, the holder of a broad patent for an abstract idea that it has casually stapled "on the Internet" to in order to push it through the patent office. At one point the patent was rejected by the court, but Ultramercial repeatedly tapped the words "on the Internet" until the CAFC obligingly agreed that the insistent tapping had some merit and overturned the lower court's ruling.

WildTangent appealed this ruling in 2012, drawing immediate support from Redhat, the CCIA, Google (in conjunction with Verizon, no less) in the form of petitions for the Supreme Court to hear the case. A couple of months later, the Supreme Court vacated the CAFC's ruling, asking it to reconsider the case in light of Mayo v. Prometheus. As of Sept. 24th, Google [et al, incl. Redhat, HP, Zynga and Homeway, Inc.], the CCIA and the EFF have also filed amicus briefs on behalf of WildTangent, urging the CAFC to rule in a consistent manner on Ultramercial's patent in light of its decision on Mayo.

Today, Public Knowledge filed an amicus brief urging the Supreme Court to review an important case on software patents, WildTangent v. Ultramercial. The basic question in this case is whether a patent to a simple, abstract idea can be valid simply by tacking on enough legal and technical language to that idea, even if that extraneous language has no real meaning.

The patent in question is U.S. Patent No. 7,346,545. That patent basically describes a simple idea familiar to anyone who has watched videos on the Internet: the idea of taking a video available for purchase, and showing it for free in exchange for viewing an advertisement first.

As Public Knowledge points out, ideas aren't patentable and what Ultramercial has here is nothing more than an abstract idea obscured by layers of technical language.

Whoever wrote the patent on advertising in this case, however, was clever. Instead of simply describing the simple idea for what it is, the patent expounds an eleven-step process in a patent claim of 349 complex, technical-sounding words. This was enough to convince one court that the process required “intricate and complex computer programming,” thus making it patentable and not an abstract idea.

Public Knowledge's brief exposes the extremely simple underlying process of Ultramercial's patent. What took its patent lawyers 349 words to explain boils down to 16 lines of code -- hardly the indicator of "intricate and complex computer programming." As a demonstration in PK's blog post, Charles Duan turns the following process steps into two (short) lines of code.

As an example, here are two steps of the process claimed in the patent.

"a fifth step of offering to a consumer access to the media product without charge to the consumer on the precondition that the consumer views the sponsor message;

a sixth step of receiving from the consumer a request to view the sponsor message, wherein the consumer submits said request in response to being offered access to the media product;

a seventh step of, in response to receiving the request from the consumer, facilitating the display of a sponsor message to the consumer;"

82 words and three complex sentences reduced to 11 words of code spanning two lines. Duan refers to Ultimecia's Ultramercial's dense faux-technical jargon as "legal filibustering," a process used to hide simplicity behind dense walls of text in order to confuse gatekeepers into submission.

And if no one believes it's that simple, Public Knowledge has provided a working version of its sixteen lines of code at this URL.

Here's the process Ultramercial's suing about in all of its 16-lines-of-code glory.

As Mike has pointed out before, the only reason Ultramercial even has this patent is because it convinced the CAFC that the addition of "on the Internet" turns an abstract idea into a patentable process. The additional wording describing the "process" is a diversionary tactic. Hopefully, a second run through will find the CAFC willing to cut through the dense wording and ridiculous "Internet" assertion and find Ultramercial's patent invalid.

from the oh-come-on dept

We've been following the Ultramercial case quite closely over the past few years. If you're not aware, this involved a company that more or less patented the idea of "you must watch this ad to get this content" (US Patent 7,346,545) and then sued pretty much everyone. Most of the companies it sued settled rather than fight (which happens all the time), including YouTube and Hulu, but one company, WildTangent, has continued the fight. Eventually, though, the case reached the Supreme Court with the key question being does taking an abstract idea like "watch this before getting that" and adding "on the internet" to it make it patentable? It's well established that you can't patent an abstract idea, but for some reason many seem to think that if you say "on the internet" it's no longer abstract. The Supreme Court did not do a full hearing on the case, but asked the appeals court of the federal circuit (CAFC -- known as the patent appeals court) to reconsider its original ruling in light of the Supreme Court's ruling in the Prometheus case, where it said that you can't patent broad medical diagnostics. The rule there was that you "could not simply recite a law of nature and then add the instruction 'apply the law.'" So, is the same true for "abstract idea" plus "on the internet"?

Apparently, for CAFC, the answer is that there is a difference, and that merely adding "on the internet" to an abstract idea makes it patentable. The ruling is quite incredible, not just for the fact that it sets up a ridiculous standard, but also for its technical naivete. CAFC basically says, gee, there are a lot of steps and graphs and charts in the patent, so, it's probably not abstract.

Viewing the subject matter as a whole, the invention
involves an extensive computer interface. Unlike Morse,
the claims are not made without regard to a particular
process. Likewise, it does not say “sell advertising using a
computer,” and so there is no risk of preempting all forms
of advertising, let alone advertising on the Internet.
Further, the record at this stage shows no evidence that
the recited steps are all token pre- or post-solution steps.
Finally, the claim appears far from over generalized, with
eleven separate and specific steps with many limitations
and sub-steps in each category. The district court improperly
made a subjective evaluation that these limitations
did not meaningfully limit the “abstract idea at the
core” of the claims.

Part of the issue is that it needs to show something new here, and the court seems to argue that any software effectively creates a "new machine" based on some really wacky logic. It states "as computer scientists understand":

a
programmed computer contains circuitry unique to that
computer. That “new machine” could be claimed in terms
of a complex array of hardware circuits, or more efficiently,
in terms of the programming that facilitates a unique
function.

Read that again. They're saying every software program creates "unique circuitry." That's how they claim this is a "new machine" making the idea patent eligible. However, as computer scientist, Tim Lee pointsout, this claim is "nonsense."

It seems that, once again, CAFC is not getting the Supreme Court's message clearly. We've already gone through this with Myriad and Mayo cases. In Mayo, CAFC twice ruled that diagnostic tests were patentable, even after the Supreme Court gave it an extra chance to correct that. That resulted in the Supreme Court slapping down CAFC and rejecting medical diagnostic patents. Then, CAFC, similarly did the same thing with gene patents, only to be smacked down just last week.

This is a nearly identical situation. CAFC rules one way ("yes, of course this abstract idea/thing of nature is patentable"), the Supreme Court says "are you sure?!? please look at this other ruling," and CAFC comes back with "yes, we're sure! patent patent patent!" The last few times that's happened the Supreme Court has had to smack CAFC down, and it looks like it may need to do so again.

from the getting-warmer... dept

We've been following the "Ultramercial" case for a while. This was about a company that got a patent (7,346,545 that is basically about requiring you to watch an ad before you can watch some content). Ultramercial sued Hulu, YouTube and WildTangent. The case bounced around the court system for a while, with some using the Bilski ruling to reject the patent as an "abstract idea." However, CAFC (the appeals court that handles patent appeals and always seems to have a soft spot for patents) said the concept was perfectly fine. In reading through the details, CAFC's explanation was basically that since the patent described doing this abstract idea "on the internet," suddenly it became patentable. Back in March, we wrote about WildTangent's appeal to the Supreme Court, which pointed out the ridiculousness of saying that as long as you add "on the internet" to an abstract idea that it suddenly becomes patentable.

While it felt like there was a good chance that the Supreme Court would hear the case, there was one other interesting development that happened a week later: the Supreme Court smartly rejected broad patents on medical diagnostics in the Prometheus Laboratories v. Mayo Labs case, noting that such patents are on unpatentable subject matter. Specifically, the ruling held that "A patent, for example, could not simply recite a law of nature and then add the instruction 'apply the law.'"

The petition for a writ of certiorari is granted [G]. The judgment is vacated [V], and the case is remanded [R] to the United States Court of Appeals for the Federal Circuit for further consideration in light of Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ___ (2012).

This actually makes a lot of sense. The Prometheus ruling makes clear that saying "general idea + apply this idea" is not patentable subject matter. And yet, CAFC's ruling in the Ultramercial case basically said the opposite, noting that "general idea + apply this idea on the internet" is patentable subject matter. So, once again, it appears that CAFC's completely out of touch view of the patent system is getting smacked down by the Supreme Court. CAFC now has these two more chances to get it right and to stop slobbering all over ridiculous expansions of the patent system. Hopefully CAFC gets it right the second time around, and the ruling in Ultramercial is useful in limiting ridiculously overbroad software patents.

from the good-question dept

Back in 2009, we wrote about a case involving a company called Ultramercial, which held a broad and ridiculous patent (7,346,545) that effectively covered the process of watching an ad before you could download content (seriously). Ultramercial sued Hulu, YouTube and WildTangent over this. The case went back and forth with an initial ruling that rejected the patent, by noting that it was just an "abstract idea" and abstract ideas are not patentable. As that court ruling noted:

At the core of the '545 patent is the basic idea that one can use advertisement as an exchange or currency. An Internet user can pay for copyrighted media by sitting through a sponsored message instead of paying money to download the media. This core principle, similar to the core of the Bilski patent, is an abstract idea. Indeed, public television channels have used the same basic idea for years to provide free (or offset the cost of) media to their viewers. At its heart, therefore, the patent does no more than disclose an abstract idea.

Tragically, CAFC, the appeals court that handles patent matters and has a long history of expanding patent law, reversed the lower court's ruling and deemed the patent valid. While it didn't put it in these words specifically, it certainly appeared that the court was saying that any abstract idea can still be patentable if you just make it happen "on the internet."

In that ruling, the court discusses the fact that "abstract ideas" are not patentable, and notes that it used to use its machine-or-transformation test to determine if something was or was not an abstract idea. However, after the Supreme Court ruled in the Bilski case that this test might not always be appropriate, while failing to say what test would be appropriate, it's left CAFC with the freedom to make up totally arbitrary rules. And in this case, the arbitrary rule was effectively "we don't apply the machine-or-transformation test to 'information age' inventions." Why? Because if the inventions aren't physical, the machine or transformation test no longer applies:

While machine-or-transformation logic served well as a tool to evaluate the subject matter of Industrial Age processes, that test has far less application to the inventions of the Information Age.... Technology without anchors in physical structures and mechanical steps simply defy easy classification under the machine-or-transformation categories.

Shorter version: what would be considered unpatentable abstract ideas in the offline world suddenly become patentable if you add "on the internet" to them.

That doesn't sound right to lots of people, and thankfully WildTangent is appealing the case and hoping the Supreme Court will hear it. As the petition to the Supreme Court notes, the question presented is:

Whether, or in what circumstances, a patent's
general and indeterminate references to "over the
Internet" or at "an Internet website" are sufficient to
transform an unpatentable abstract idea into a
patentable process for purposes of 35 U.S.C.

Along with the petition, there were also two interesting filings in support, urging the Supreme Court to hear the case. One from Redhat, CCIA and EFF, which goes into great detail about how such broad patentability would seriously harm the open source world, and a strongly worded brief from Google and Verizon (yes, together) about how such a ruling would do serious harm to innovation by allowing all sorts of abstract ideas to be locked up via patent. Hopefully the Supreme Court is willing to listen -- and will push back (yet again) on a bad CAFC ruling.

from the bilski-ftw dept

Last fall we wrote about how a company named Ultramercial had sued Hulu, YouTube and WildTangent over patent 7,346,545 for requiring people to watch an ad before being able to access content. It resulted in an interesting discussion in our comments, where some patent system defenders insisted that the patent was perfectly legit. Unfortunately, the court disagrees with those folks. It has ruled that the patent is not valid (the ruling covers Hulu and WildTangent -- YouTube was dismissed from the case). Perhaps most interesting is the fact that the court chose to use the "machine or transformation test" for judging the patent. While some have read the Bilski ruling to "reject" the "machine or transformation" test, that's not quite true. It just said that's not the only test. The court in this case went through an explanation for why it felt this was still an appropriate test:

It is important to note, however, that even after the Supreme Court's decision in Bilski, the
machine or transformation test appears to have a major screening function--albeit not perfect-- that
separates unpatentable ideas from patentable ones. Indeed, four of the Justices, listed on Justice
Stevens's concurring opinion, would have taken the machine or transformation test to its logical limit to
hold that business methods are categorically unpatentable. Id. at 3257 (Stevens, J., concurring). Joining
a concurring opinion, Justice Scalia, who signed on to parts of the plurality opinion as well, would not
hold all business methods unpatentable, but would agree with Justice Breyer that "not [] many
patentable processes lie beyond [the] reach [of the machine or transformation test]." Id. at 3258 (Breyer,
J., concurring). In sum, at least five (and maybe all) Justices seem to agree that the machine or
transformation test should retain much of its utility after the Supreme Court's decision in Bilski.
Therefore, even though the machine or transformation is no longer the litmus test for patentability, the
Court will use it here as a key indicator of patentability.

And, using that test, the court finds this particular invention not patentable subject matter. It also points out that the patent is really just covering an abstract idea (the reasoning used by the Supreme Court to reject the Bilski patent):

At the core of the '545 patent is the basic idea that one can use
advertisement as an exchange or currency. An Internet user can pay for copyrighted media by sitting
through a sponsored message instead of paying money to download the media. This core principle,
similar to the core of the Bilski patent, is an abstract idea. Indeed, public television channels have used
the same basic idea for years to provide free (or offset the cost of) media to their viewers. At its heart,
therefore, the patent does no more than disclose an abstract idea.

I'm guessing this will likely be appealed, so it should be an interesting case to follow. You can read the full (quite clear) decision below:

from the watch-out dept

So we were just talking about some new company called Free All Music, which has a plan to let people download free mp3s if they agree to watch a video ad first. I have my doubts about how well it would work... but apparently the company may also need to watch out for another issue: a bogus patent. You see, there's some company called Ultramercial, who not only holds a US patent 7,346,545 on the concept of distributing content where the user can get it for free after watching an ad, but Ultramercial recently went legal. Just a few days ago, it sued Hulu, YouTube and WildTangent for infringement over that very patent. Seriously, USPTO? A patent on watching an ad before getting free content? This is why patent examiners get such a bad rap.